1.1 What is Arbitrage?
Definition: The practice of exploiting price differences of identical or similar financial instruments, assets, or commodities across different markets.
Simple examples (e.g., buying a product in one country and selling it for more in another).
Core principle: Buy low, sell high — instantly and risk-free (in theory).
1.2 The History of Arbitrage
Origin in ancient trade routes
Evolution through financial markets: from currency arbitrage to crypto and digital products
Key milestones: rise of high-frequency trading (HFT), global arbitrage networks, and AI-based price scanning tools
1.3 Types of Arbitrage (Introductory Overview)
This will be explored in detail in later modules.
Spatial arbitrage (geographic price differences)
Temporal arbitrage (time-based price inefficiencies)
Triangular arbitrage (currency markets)
Retail/Online arbitrage (e.g., Amazon, eBay)
Statistical arbitrage (quantitative methods)
Crypto arbitrage
1.4 Why Arbitrage Opportunities Exist
Market inefficiencies
Human behavior and delayed reactions
Different pricing models and systems
Regulatory gaps and transaction costs
Time lags in information or execution
1.5 Key Concepts You Must Understand
Risk vs. reward
Liquidity and slippage
Market access and barriers
Transaction costs and taxes
Technology and automation in arbitrage
Legal and ethical considerations
1.6 Tools & Resources You'll Need
Basic financial literacy
Market data feeds (price trackers, alert systems)
Calculators and spreadsheets
Online marketplaces or trading platforms
Capital (even small amounts to start)
Optional: coding skills for bots and scrapers
🔄 Wrap-Up: Module 1 Summary
Arbitrage is a time-sensitive, information-driven strategy.
Understanding why price differences occur is as important as knowing how to exploit them.
Ethical, legal, and strategic thinking is critical.
📝 Assignment / Activity:
Case Study: Identify a real-world arbitrage opportunity (past or present).
Provide a brief report covering:
The product or asset
The two markets (or price points)
How the arbitrage worked
Any risks or challenges involved
